2006 (4) TMI 478 - HC - VAT and Sales Tax

Summary

Issues:
Assessment under Madhya Pradesh Commercial Tax Act, 1994 - Delay in payment of tax - Imposition of penalty under section 69 - Submission of false information - Stay of proceedings for recovery of fine - Submission of purchase bills - Tax exemption certificate - Liability for entry tax - Interpretation of Full Bench judgment - Wilful suppression of bills - Imposition of penalty under section 69 - Collection of material by Revenue.

Analysis:
The judgment by the High Court of Madhya Pradesh dealt with various issues arising from the assessment under the Madhya Pradesh Commercial Tax Act, 1994. The petitioner, an authorized dealer of a company, was involved in the sale of scooters and motorcycles manufactured by the said company. The assessment for the year 1999-2000 revealed that the dealer had not paid monthly tax on time and had not deposited VAT as per return, leading to the imposition of interest and penalty. The petitioner contended that the tax discrepancy was due to differences in opinion and not intentional suppression of facts.

Regarding the entry tax for the same year, it was found that the petitioner had not paid tax by furnishing false information, resulting in the imposition of penalties under section 69 of the Act. The petitioner, in response, argued that since an appeal against the assessment order was pending, the proceedings for the recovery of fines should be stayed. However, a substantial penalty was imposed, leading the petitioner to file a revision.

During the revision process, the petitioner was directed to submit purchase bills, which were eventually provided but with torn lower portions. The revisional authority suspected that the goods were produced locally, and bills were torn deliberately. The petitioner also claimed exemption from entry tax based on a tax exemption certificate issued to the manufacturing company.

The petitioner relied on a Full Bench judgment of the court to support their case, emphasizing the importance of the absence of a rubber stamp endorsement. The court noted that the Revenue had not collected sufficient material to prove deliberate suppression of bills, as required by the judgment. Consequently, the orders of the revisional and assessing authorities were set aside, granting the dealer an opportunity to respond to any material collected by the Revenue before a final decision on the penalty.

In conclusion, the petition succeeded, and the court allowed it without any costs, highlighting the importance of collecting substantial evidence before imposing penalties under the Act.